Indonesia Hikes Fuel Prices by 30%, Cuts Energy Subsidies

Fuel prices increased by about 30% across Indonesia Saturday after the government reduced some of the costly subsidies that have kept inflation in Southeast Asia’s largest economy among the world’s lowest.

Indonesians have been fretting for weeks about a looming increase in the price of subsidized Pertalite RON-90 gasoline sold by Pertamina, the state-owned oil and gas company. Long lines of motorbikes and cars snaked around gas stations as motorists waited for hours to fill up their tanks with cheaper gas before the increase took effect on Saturday.

The hike — the first in eight years — raised the price of gasoline from about 51 cents to 67 cents per liter and diesel fuel from 35 cents to 46 cents.

President Joko Widodo said the decision to increase the fuel prices was his last option as the country’s energy subsidy had tripled this year to 502 trillion rupiah ($34 billion) from its original budget, triggered by rising global prices of oil and gas.

“The government has tried its best as I really want fuel prices to remain affordable,” Widodo told a televised address announcing the fuel hike. “The government has to make decisions in difficult situations.”

He said that the flow of subsidies to the public was not well targeted — about 70% of subsidies were benefiting middle and upper classes — and the government decided instead to increase social assistance.

Finance Minister Sri Mulyani Indrawati said authorities were monitoring the impact on inflation and economic growth of the rise in fuel price.

Inflation has been relatively modest with the shock being mostly absorbed through a budget bolstered by energy subsidies. Inflation hit 4.6% in August as Bank Indonesia, the central bank, has said it would reassess the inflation outlook in response to the government fuel price policy.

Indrawati said in a separate news conference that the government would provide 150,000 rupiah ($10) cash handouts to cushion the impact of the fuel price increase on 20.6 million poor families until the year-end. The total cost of the handouts will be 12.4 trillion rupiah, which will be reallocated from the budget for energy subsidies.

She said the government will also spend 9.6 trillion rupiah ($644 million) on salary assistance to about 16 million low paid workers and 2.17 trillion rupiah ($145 million) will go to subsidizing transport costs, particularly for motorcycle taxi drivers and fishermen.

“We hope this can reduce pressure of rising prices and help reduce poverty,” Indrawati said.

The government has subsidized fuel for decades in Indonesia, the vast archipelago nation of more than 270 million people.

Fuel prices are a politically sensitive issue that could trigger other price hikes and risk student protests. In 1998, an increase in prices sparked riots that helped topple longtime dictator Suharto.

Source: Voice of America

Malaysian Investment Authority Partnered With Chinese Firm’s Overseas Branch For Supply Chain Programme

KUALA LUMPUR, The Malaysian Investment Development Authority (MIDA), said yesterday, it partnered with Xinyi Energy Smart (Malaysia), an overseas division of China’s integrated glass manufacturer Xinyi Glass Holdings Limited, for a supply chain programme.

This programme seeks to establish a conducive supply chain ecosystem, by partnering with local suppliers, vendors and service providers, the two sides said in a statement.

Xinyi Energy Smart, which is located at the Elkay Industrial Park in Malacca, is looking to expand its supplier base, as part of its localisation plan.

MIDA, which has played an instrumental role in helping Xinyi set-up its operations in Malaysia, said, it is supportive of the firm’s supply chain programme, as it opens up opportunities for local suppliers to grow and develop their businesses.

This is in tandem with the supply chain facilitation programme initiated by the Malaysian government, tasked to MIDA, to assist both domestic and foreign companies in their operations in Malaysia.

MIDA deputy chief executive officer for investment promotion and facilitation, Lim Bee Vian, said, the agency’s supply chain programme aims to create opportunities for domestic companies, narrow gaps in the supply chain, support multinational companies and limited liability companies, in outsourcing their manufacturing activities to domestic companies, as well as, to develop and upgrade domestic companies.

She also said, MIDA is looking forward to the success of this programme in bridging the needs and opportunities between Xinyi and local companies.

Xinyi has invested approximately 2.1 billion ringgit (468.6 million U.S. dollars) in Malaysia, and created more than 1,900 jobs.

Xinyi Smart Energy managing director, Sin Ket Hin said, “We are happy that the government has initiated the supply chain facilitation programme, to assist investors to identify suitable local suppliers. This certainly will ease our efforts in sourcing for raw materials and transportation services, as local suppliers sign up under our programme.”

Source: Nam News Network

Rising Salinity Threatens Rice Crops on Southeast Asia’s Sinking Coast

KAMPOT PROVINCE, CAMBODIA/LONG AN PROVINCE, VIETNAM/WASHINGTON —

Prak Nhorn has no hope for his rice crop this year.

“When I transplant seedlings, they die out. The salt is still in the soil,” said the farmer from Slab Ta Aon village, a riverside settlement roughly 150 kilometers southwest of Cambodia’s capital, Phnom Penh, and 4 kilometers from the green, mangrove-lined coast of Kampot province.

The farmer said that saltwater has destroyed rice paddies in Slab Ta Aon village for the past two years. Prak Nhorn, 55, doubts that he and the other villagers will be able grow rice in the future.

Slab Ta Aon’s problem is no environmental fluke. It is an omen of a global environmental crisis that has been brewing for decades, destabilizing food systems that feed millions.

Around the world, saltwater is seeping further and further inland from the coasts, tainting soils and fresh water with salt. A complicated interplay between groundwater extraction, river damming for hydropower, and riverbed mining is sinking shorelines as climate change raises the seas, drawing seawater inland.

River deltas are especially vulnerable. Fan-shaped plains that form where rivers spill into the sea, deltas often boast fertile soils thanks to nutrient-rich sediments delivered from upstream. Increasing salinity puts these special agricultural regions at risk.

The threat is perhaps most grave in Asia, where vast “megadeltas” are vital for growing the continent’s staple crop — rice. High salinity can make it impossible to grow rice.

“You really see a solid layer … a white layer on the soil from where saltwater was,” said Bjoern Ole Sander of the International Rice Research Institute (IRRI). Rice plants growing in saline soil “look like straw,” he continued. “If you touch them, they’re hollow. There’s nothing.”

Food, drinking water at risk

In Southeast Asia, saltwater threatens rice paddies in the Mekong River and Red River deltas in Vietnam, and the deltas of the Chao Phraya River in Thailand, and the Ayeyarwady River in Myanmar.

In South Asia, it degrades soils and taints drinking water in the densely populated Ganges–Brahmaputra Delta of Bangladesh and India and the Indus Delta of Pakistan.

China’s Yangtze River Delta also faces rising salinity.

Beyond Asia, saltwater intrusion affects the Nile Delta in Egypt and the Mississippi Delta in the United States — both important agricultural regions.

For subsistence farmers like Prak Nhorn, rising salinity directly threatens food security and access to drinking water. About 76% of Cambodians live in rural areas and many depend on natural resources for food. This makes many of the country’s 17.2 million inhabitants vulnerable to changes in the environment. Undernutrition rates in Cambodia hover around 15%.

Cambodian farmers have reported issues with salinity for years and “there is saltwater intrusion” in the country, said Hak Mao, director of Cambodia’s Climate Change Department at the Ministry of Environment. But “limited technical capacity” means the true extent of the problem in Cambodia is not known, he said.

In neighboring Vietnam, however, the costs of saltwater intrusion have been clear for decades.

“If there’s fresh water, we can grow rice all year round,” said farmer Khau Van Ngoan of Vietnam’s Long An province. “If there’s none, nothing can be grown.”

Vietnam grows more than half of its rice in one region — the Mekong River Delta.

There, salinity has “really been on the rise,” said hydrologist Gijs Simons of FutureWater, a consultancy that uses satellite data to assess salinity for the Mekong River Commission (MCR). The area affected by severe salinity, which makes it nearly impossible to grow rice, has roughly “doubled since the ’90s or even almost tripled for some years,” he said.

In the past, saltwater would seep about 30-50 kilometers inland. Now it can reach areas more than 100 kilometers inward from the coast, said hydrologist Binh Doan Van of the Vietnamese-German University, who studies saltwater intrusions in the Mekong River Delta. One particularly severe salinity intrusion in 2016 affected 270,000 hectares of rice, said Andrew Wyatt, who oversees projects in Southeast Asia for the environmental organization International Union for Conservation of Nature, or IUCN. The damage totaled an estimated $455 million, or 1.5% percent of Vietnam’s annual rice yield.

Shrimp alternative

But it’s possible to see rising salinity as an opportunity rather than a disaster.

Rice can’t tolerate salty water, but shrimp can — and shrimp fetch a better price than the rice Vietnam produces for export to low- and middle-income countries.

“Shrimp is better business than rice. It’s more lucrative,” said Dang Thi Vich, a shrimp farmer from Ben Tre province.

Some farmers in the Mekong River Delta took advantage of this as salinity rose, growing shrimp instead of rice during the dry season when conditions are most saline. The Vietnamese government and NGOs later launched programs to help more farmers adopt this rice-shrimp rotation system.

“Shrimp farming began about some 20 years ago and it’s become very popular,” said Vich. “Everyone grew rice before that.”

Things are changing fast. In 2018, 15% of farmers in the delta gave up rice farming for something else, usually shrimp farming, said Bradford Mills, an economist at Virginia Tech who studied the switch. The next year, another 10% stopped growing rice. Simons noted that the shift from rice paddies to shrimp ponds is visible in his satellite data.

Experts say the Vietnamese government plans to scale back rice farming and diversify the Mekong River Delta’s economy. This will mean upping shrimp and other aquaculture along the coast and growing “high quality” rice for export to rich countries. This diversification “is in line with Vietnam’s move from a low-income country to a middle-low-income country,” said Wyatt.

But researchers have expressed concerns that adaptions to rising salinity in Vietnam are coming at a social cost, widening the gap between rich and poor.

“For the country scale, [shrimp farming] may be good,” said Binh. “But for [the] local scale, for individuals, that’s I think [it] still has some problems.”

Ben Tre province farmer Nguyen Thi Be Lieu said she tried shrimp farming a couple of years ago, “but business didn’t take off. We spent more than we earned, so we stopped.”

Switching from rice to shrimp aquaculture is risky. Not everyone can afford to. Those who can’t — and who don’t receive aid — can have no choice but to sell or lease their land and migrate to find work.

There’s also evidence that shrimp aquaculture isn’t always environmentally sustainable. While Wyatt noted that rice-shrimp rotation is more sustainable than farming rice or shrimp exclusively for lands at the mouth of the Mekong, it isn’t a good solution everywhere it is being adopted. If there’s not enough freshwater flow from upstream, dry-season shrimp ponds can leave salt in the soil, which over time makes it hard to grow rice at all in the wet season. Ponds can get so salty that even shrimp can’t survive.

“Saline soil is bad for business, even shrimp farming,” said Long An province farmer Pham Van Bay. “There’s absolutely nothing you can do with saline soil.”

Aquaculture can also pollute waterways, a problem Binh says should be managed to ensure that it stays sustainable and profitable for the future.

Still, if these challenges can be overcome, sating wealthy countries’ appetites for shrimp and high-quality rice could pay off for many farmers and the Vietnamese economy as a whole, said Binh and Wyatt.

‘How can we have rice to eat?’

The question, said Sander, “is of course: where do you produce the rice instead? Because demand is still there. And shrimp cannot replace rice on people’s plates.”

Vietnam is the third-biggest rice exporter worldwide, and more than 90% of its exports come from the Mekong River Delta. Countries that are “big rice importers … are hit also by climate change impacts and salinity impacts in the Mekong Delta,” said Sander. For instance, the Philippines imports nearly 80% of its rice from Vietnam.

Demand for rice is increasing as the world population grows. IRRI estimates that rice production globally needs to increase by 1% to 1.2% every year to keep rice prices low enough to be affordable for billions of people who depend on the grain.

For the Mekong River Delta, Binh said that adapting to rising salinity involves a combination of pricey infrastructure to keep saltwater out — which can come with its own environmental problems — and changes to how people live and work, like adopting rice-shrimp systems. Other agricultural deltas face similar choices.

Countries that import a lot of rice from salinity-affected regions will need to find new sources to meet their growing demand for rice, or consumers will simply pay more for it. Many farmers will need to adapt. And some will just need to find a way to survive.

Suos Sovann lives just a stone’s throw away from Prak Nhorn’s farm in Slab Ta Aon village. She is a rice farmer — or was. Saltwater now floods her 7,000-square-meter farm every year, making her soil infertile.

Unable to grow rice for herself and her family, Suos Sovann now depends on money sent by two of her children who work in a nearby garment factory. Combined, they send her about $50 every month. She will spend $30 of it on rice.

She wonders if perhaps her children could send more money, but she doesn’t dare ask. There’s nothing to do but bear with it, she says.

“If we don’t farm,” asked Suos Sovann, “how can we have rice to eat?”

Source: Voice of America

Sri Lanka’s Deposed Ex-Leader Returns From Exile

Sri Lanka’s deposed former president Gotabaya Rajapaksa returned to the country Friday, an airport official said, seven weeks after he fled amid the island’s worst-ever economic crisis.

Rajapaksa was festooned with flowers by a welcoming party of ministers and politicians as he disembarked at the main international airport, the official added — in a sign of his enduring influence in the Indian Ocean nation critics say he led to ruin.

“There was a rush of government politicians to garland him as he came out of the aircraft,” the official told AFP.

Rajapaksa fled Sri Lanka under military escort in mid-July after unarmed crowds stormed his official residence, following months of angry demonstrations blaming him for the nation’s unprecedented economic crisis.

He sent in his resignation from Singapore before flying on to Thailand, from where he had petitioned his successor Ranil Wickremesinghe to facilitate his return.

The 73-year-old leader arrived from Bangkok via Singapore on a commercial flight, ending his 52-day self-imposed exile.

“He has been living in a Thai hotel as a virtual prisoner and was keen to return,” a defense official, who asked not to be named, told AFP.

“We have just created a new security division to protect him after his return,” the official added.

“The unit comprises elements from the army and police commandos.”

Opposition politicians have accused Wickremesinghe of shielding the once-powerful Rajapaksa family.

Sri Lanka’s constitution guarantees bodyguards, a vehicle and housing for former presidents, including Gotabaya and his elder brother and fellow ex-president Mahinda.

Gotabaya Rajapaksa’s resignation ended his presidential immunity, and rights activists said they would press for his arrest on multiple charges, including his alleged role in the 2009 assassination of prominent newspaper editor Lasantha Wickrematunge.

“We welcome his decision to return so that we can bring him to justice for the crimes he has committed,” said Tharindu Jayawardhana, a spokesperson for the Sri Lanka Young Journalists’ Association.

Rajapaksa also faces charges in a court in the U.S. state of California over Wickrematunge’s murder and the torture of Tamil prisoners at the end of the island’s traumatic civil war in 2009.

Tight security

Singapore declined to extend Rajapaksa’s short-term visa and he travelled to Thailand in August, but authorities in Bangkok instructed him not to step out of his hotel for his own safety.

Rajapaksa’s youngest brother, Basil, the former finance minister, met with Wickremesinghe last month and requested protection to allow the deposed leader to return.

On Friday police deployed plainclothes officers and armed guards outside a government residence allocated to Rajapaksa in Colombo ahead of his arrival.

Security at his private home was also stepped up, officials said, adding that he was expected to first visit the family residence.

Sri Lanka has endured months of shortages of crucial goods including food, fuel and medicines, along with lengthy electricity blackouts and skyrocketing inflation after running out of foreign currency to finance essential imports.

The coronavirus pandemic dealt a hammer blow to the island’s tourism industry and dried up remittances from Sri Lankans working abroad — both key foreign exchange earners.

Rajapaksa, who was elected in 2019 promising “vistas of prosperity and splendor,” saw his popularity nosedive as hardships multiplied for the country’s 22 million people.

His government was accused of introducing unsustainable tax cuts that drove up government debt and exacerbated the crisis.

Wickremesinghe was elected by parliament to see out the remainder of Rajapaksa’s term. He has since cracked down on street protests and arrested leading activists.

The government defaulted on its $51 billion foreign debt in April and the central bank forecasts a record 8% GDP contraction this year.

After months of negotiations, the International Monetary Fund agreed on Thursday to a conditional $2.9 billion bailout package to repair Sri Lanka’s battered finances.

Source: Voice of America

With No Immunity, Sri Lanka’s Rajapaksa Faces Legal Troubles

Sri Lanka’s ousted President Gotabaya Rajapaksa, who returned home after seven weeks in exile following protests over economic hardships, could face legal action over forced disappearances of activists now that he has been stripped of constitutional immunity, a lawyer said Saturday.

Rajapaksa flew to Colombo around midnight Friday from Thailand and was escorted under military guard to his new home in the capital.

He has no pending court cases because he was protected by constitutional immunity as president. A corruption case against him during his time as a top defense official was withdrawn soon after he was elected in 2019.

However, Rajapaksa will be served a summons next week to appear at the Supreme Court, where his immunity from testifying on the forced disappearance of two young political activists is challenged, said lawyer Nuwan Bopage, who represents the victims’ families. He said Rajapaksa fled the country when he was about to be served a summons in July.

The disappearances took place 12 years ago soon after the end of the country’s long civil war when Rajapaksa was a powerful official at the Defense Ministry under the presidency of his older brother.

At the time, Rajapaksa was accused of overseeing abduction squads that whisked away rebel suspects, critical journalists and activists, many of them never to be seen again. He has previously denied any wrongdoing.

Rajapaksa escaped from his official residence when tens of thousands of people, angry over economic hardships when the country slipped into bankruptcy and faced unprecedented shortages of basic supplies, stormed the building July 9. Days later, he, his wife and two bodyguards flew aboard a military plane to the Maldives. A day later he went to Singapore, and later Thailand.

Sri Lanka has run out of dollars for imports of key supplies, causing an acute shortage of essentials like food items, fuel and critical medicine.

The foreign currency shortage has led the country to default on its foreign loans. Sri Lanka’s total foreign debt exceeds $51 billion of which $28 billion must be repaid by 2027.

The International Monetary Fund on Thursday agreed to provide Sri Lanka $2.9 billion over four years, subject to management approval that will come only if the island nation’s creditors give assurances on debt restructuring.

Economic difficulties led to monthslong street protests, which eventually led to the collapse of the once-powerful Rajapaksa family that had controlled the affairs of the country for the most part of the last two decades. Before Rajapaksa resigned after fleeing, his older brother stepped down as prime minister and three other close family members quit their Cabinet positions.

President Ranil Wickremesinghe, who took over from Rajapaksa, has since cracked down on protests and dismantled their main camp opposite the president’s office.

Some protesters said they were not opposed to his return as long as he faces justice.

“Whether he is president or not, he is a citizen of Sri Lanka and he has the right to live in this country,” said Wijaya Nanda Chandradeva, a retired government employee who had voted for Rajapaksa and then participated in protests to oust him. He said Rajapaksa should be given necessary protection if there is a threat to his safety.

“I reject him because we elected him and he proved himself to be unsuitable,” said Chandradeva.

Bhavani Fonseka of the Center for Policy Alternatives, an independent think tank, said although Rajapaska is not going to be seen favorably, “the anger we saw in July has diminished. But there are still many questions about his role in the economic crisis and the call for accountability is still there.”

Source: Voice of America

Sri Lankan Ex-President Returns After Being Forced Out by Popular Protests

Former Sri Lankan President Gotabaya Rajapaksa, who fled the country after facing widespread protests over the nation’s economic collapse, returned to Colombo Friday.

Political analysts said that while there is popular anger at his return, it is unlikely to be expressed through similar protests because of repressive measures taken by the government against some leaders of the citizens movement that led to his exit.

Rajapaksa came back from Bangkok, where he had been staying on a temporary visa. He left Sri Lanka seven weeks ago on a military plane, after monthslong chants of “Gota Go Home” filled the streets, culminating with hundreds of protesters storming his official residence.

He first went to the Maldives, then Singapore and finally to Bangkok. On his return, he was welcomed by lawmakers from his party at the airport.

Demonstrators had blamed Rajapaksa’s government, in which his family members held powerful positions, for the dire economic crisis that has led to skyrocketing inflation and crippling food and fuel shortages.

The citizens movement had dismantled the nearly two-decade-long grip on power of the powerful Rajapaksa political dynasty. Even before Rajapaksa left the country, his brothers, who held powerful posts in the government, including that of prime minister, had resigned as an enraged public blamed the family for corruption and for policies that contributed to the country’s economic ruin.

But the protests died down after Rajapaksa’s successor, President Ranil Wickremesinghe, cracked down on the movement. Days after he took office, troops dismantled the main camp in front of the presidential secretariat, where the protests were held. Three student union leaders, who were at the forefront of the protests, were arrested last month under stringent anti-terrorism laws.

Wickremesinghe took office in July with support from the party over which the Rajapaksas hold influence and which has a majority in Parliament. Protesters and opposition politicians had accused Wickremesinghe of lacking political legitimacy and protecting the Rajapaksa family.

There are, however, demands for action against the former president.

“There is anger in the country and people are asking why Gotabaya has come back, but there are unlikely to be fresh protests due to the crackdown by the government,” Paikiasothy Saravanamuttu, head of the Center of Policy Research in Colombo told VOA. “However, people will want to take him to court to answer allegations that he faces such as corruption.”

“We will call on the government to investigate allegations against Gotabaya Rajapaksa which include that of using public money for personal use,” Tharindu Jayawardhana, a spokesman of the Sri Lanka Young Journalists Association in Colombo, told VOA.

Joseph Stalin, general secretary of the Sri Lanka Teacher’s Union, told AFP that he should be prosecuted. “He should be arrested for causing such misery for the 22 million people of Sri Lanka.”

Some analysts also said that the former president’s return could pave the way for the powerful Rajapaksa clan to make a bid to reassert itself politically in the island nation.

“His return shows they have no regard to the issues raised by the huge citizens’ movement that forced them to step down,” political analyst Jayadeva Uyangoda in Colombo told VOA. “They want to erase the memory of the movement and once again consolidate their grip on politics.”

Meanwhile, a preliminary agreement that the government reached with the International Monetary Fund this week for a $2.9 billion bailout package has raised hopes as the first tentative step in rescuing the country’s battered economy.

“Getting an agreement with the IMF is the only game in town,” Murtaza Jafferjee, chairman of the Advocata Institute in Colombo told VOA. But he pointed out that it could still take four to six months before the funds flow in. “Before that we have to show progress with our debt restricting efforts and fiscal consolidation.”

Sri Lanka has defaulted on its foreign debt of about $51 billion and is desperately short of foreign exchange. Economists say getting the country, which was counted as a middle-income nation some years ago, back on its feet will be a long haul.

Source: Voice of America